Rural Economic Development Issues Does the Government Help or Hinder Business Growth in the Rural Areas

Critical Mass Issues Retention of Hospital and School key to any ability to attract, retain or start new businesses Capital for start ups and major expansions often limited Small local banks often not capitalized to point can loan large amounts Branch banks often not active in community affairs Venture capitalist network not available Labor availability especially in specialized skills are an issue Support such as legal, accounting and technical resources not widely available or best quality

The Kansas Model Rural Opportunity Zones (ROZ) Identified ‘struggling’ counties based on population loss Provided state income tax free status for five years to any out of state resident who moved to one of those counties State Income tax on business or wage earner County option to pay half of yearly school loan payments of ROZ recipients Aimed at attracting educated individuals Ashland, Kansas targeted doctors and was an immediate success story Appears to be particularly effective in bringing young entrepreneurs with families back to the county of their upbringing

Kansas Secretary of State’s New Business Formation Report: Northwest Kansas is Experiencing Significant Business Formation. Also significant are the increases in the Northwest Region of Kansas. Although we can’t establish a definite link, that area correlates with the Rural Opportunity Zones established by Governor Brownback. Dr. Art Hall also noted: “In addition to the strong numbers posted in many of the state’s urban areas, several rural areas also experienced a surge in business formation—particularly in northwest Kansas. The business formation numbers in Harper and Comanche Counties are noteworthy too, because they may be driven by the new oil-related activities in those counties.”

Federal and State Economic Development Assistance Most Federal Programs beyond ‘reach’ of rural areas Qualifications difficult to meet and/or paperwork requirements beyond available skill sets Community Development Block Grants State’s control application process and many have made it more difficult to apply or limit uses beyond federal requirements State Commerce Departments often ignore or give limited support to rural economic development efforts Urban areas tend to have well staffed and well funded local Eco-Devo units Rural areas often one part time, low paid employee and limited funding Recruitment of those small businesses of less than 10 employees are not pursued by State Commerce Departments In Kansas 77% of small business is less than 10 employees

What Can or Should Government Do to Help? First do no harm! Some environmental regulations that make sense in urban areas don’t in rural areas Corporate farming laws pushed by activists ignore the new reality of agriculture In rural areas bordering other states work to consolidate regulations as products move across borders For example agriculture and the necessary support mechanisms such as trucking Inspections and licensing coordinated and standardized when possible Consider placing state jobs in rural areas Remote office applications for data entry or processing jobs Low cost of space---many communities will provide free space 5 jobs in a rural community has impact

What Can or Should Government Do to Help? Coordinate the big picture issues for rural development Kansas had great success with commercial dairies and the processing plants to condensate their milk for shipment Commerce Department was active in all stages of recruitment, transition and continued support services Certain opportunities cannot be done without assistance Example: transition of some crop land to high value crops instead of bulk crops such as wheat High value crops increase per acre return, increase land values and justify irrigation usage over bulk crops BUT they are not price supported Farmers are reluctant to take risk of transition Processors won’t come without committed farmers Stretching seasons with north-south corridors requires multi state cooperation